Correlation Between Eastwood Bio and Diamond Estates

Can any of the company-specific risk be diversified away by investing in both Eastwood Bio and Diamond Estates at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eastwood Bio and Diamond Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastwood Bio Medical Canada and Diamond Estates Wines, you can compare the effects of market volatilities on Eastwood Bio and Diamond Estates and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eastwood Bio with a short position of Diamond Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Diamond Estates.

Diversification Opportunities for Eastwood Bio and Diamond Estates

0.41

Correlation Coefficient

Eastwood Bio  Diamond Estates

Very weak diversification

The 3 months correlation between Eastwood and Diamond is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines and Eastwood Bio is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eastwood Bio Medical Canada are associated (or correlated) with Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Diamond Estates go up and down completely randomly.

Pair Corralation between Eastwood Bio and Diamond Estates

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to under-perform the Diamond Estates. In addition to that, Eastwood Bio is 2.11 times more volatile than Diamond Estates Wines. It trades about -0.1 of its total potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.02 per unit of volatility. If you would invest  22.00  in Diamond Estates Wines on October 3, 2024 and sell it today you would lose (1.00) from holding Diamond Estates Wines or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Diamond Estates Wines

Eastwood Bio Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastwood Bio Medical Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eastwood Bio is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Diamond Estates Wines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eastwood Bio and Diamond Estates

The main advantage of trading using opposite Eastwood Bio and Diamond Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio position performs unexpectedly, Diamond Estates can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Diamond Estates will offset losses from the drop in Diamond Estates' long position.

The idea behind Eastwood Bio Medical Canada and Diamond Estates Wines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.